• Microsoft announced that it was writing down the value of its stock of Surface RT tablets by $900 million. Does this mean that the tablet boom is over?

By valuing its stock $900 million, the tablet boom might be over. I will discuss the reasons now. The lawsuit filed a case against Microsoft and some of its officers, including the CEO Steve Ballmer, former Chief Financial Officer Peter Klein, Chief Accounting Officer Frank Brod and former Windows marketing head Tami Reller. It was said that they violated the federal securities laws by issuing the fake and misleading statements regarding the financial performance of Surface RT. Along with the other wrong happenings, the lawsuit said that Microsoft already have collected huge amount of stock at the end of its third fiscal quarter and did not tell the investors about it.
Then on early july, Microsoft announced its stock value, which was 900 million dollars. There was a decrease in profit as the inventory adjustment related to a 150 dollar price cut for the Surface RT. This also caused its stock to a downfall of 34 billion dollars of the company market value. Another point which accelerates the fact that tablet boom was over for Microsoft, is that in a document filed in July with the SEC, Microsoft said that it made 853 million dollars sales of its surface tablets in the past fiscal year. This proved that it was going in negative cash flow, as the sales being less than the value of its inventory.
In defense the Microsoft executives said ‘Microsoft’s foray into the tablet market was an unmitigated disaster, which left it with a large accumulation of excess, overvalued Surface RT inventory,”.
However, a university law professor said that it was not surprising for him that a law suit would be filed against the Microsoft. His comment lead to the right decision, which was the ending of boom for the RT tablets. The comment is as follows
“Based on those kinds of very positive statements, people could say they bought stock because they thought things were going swimmingly well,” when, in actuality, Microsoft executives may have known things weren’t going well, O’Connor said.
“That could be a problem for Microsoft.”